The DoD is often criticized for wasting money by paying too much for things. An infamous example from the past is the $600 toilet seat. Well, I used to work in the Defense industry and can easily see how a toilet seat can cost $600. It goes like this: A manufacturer makes toilet seats for, say, $20. The DoD approaches this manufacturer with a request for toilet seats. But these toilet seats, being used in an airplane, have different dimensions than the ones currently being made by the manufacturer. So the manufacturer has to invest in new tooling, production lines, and possibly employee training. In addition, the DoD has a set of requirements that the toilet seats must survive rough airplane flights, hard landings, and long term usage. So the manufacturer must invest time and money to create the machines and (more importantly) documentation to prove to the DoD that these toilet seats have been produced and tested in such a way as to meet the requirements. The manufacturer has invested a lot of money. Maybe hundreds of thousands of dollars. This outlay must be recouped during the production run. A normal production run of toilet seats may run in the millions. But this DoD contract? Maybe a few hundred seats.
So, at first glance it appears that the DoD is their own worst enemy, insisting on excessive requirements and requesting small numbers of product. Many advocate for the DoD to relax their requirements, to effectively deregulate their suppliers. This has been tried in the past and has always resulted in disaster. Here's an example I remember quite well from the mid-1980s. The DoD buys millions and millions of bolts and they had a requirement in place where every time bolts were procured, a few were set aside and tested to ensure that they were as strong as advertised. These tests cost money and the bolts always passed the testing. So, as a cost savings measure, the rules were changed to allow the bolt maufacturers to simply provide paperwork showing that the bolts were tested at the time of manufacture. The bolt companies were now deregulated. By the mid-1980s the market was flooded with millions of counterfeit and substandard bolts that were not nearly as strong as the suppliers claimed on paper. This was a true scandal and affected the entire DoD (tanks were literally shaking apart), the space program, and even the consumer market. I was working on a satellite project at the time and we had to replace every bolt we still had access to with tested replacements and provide justification for bolts not replaced. The end result was stricter regulation in the form of the Fastener Quality Act of 1990. (More information on the Fastener Quality Act).
This is nothing new. The problem was so bad during the Civil War that the term for it entered our language. Shoddy originally meant an inferior type of cloth. So much of what the government purchased for the war was so bad, the time became known as "The Age of Shoddy," and we still use the word to mean any inferior product. Every time the government spends a lot of money, the contractors try to take advantage of it. The problem is universal, applying to the commercial world and even traditionally non-capitalist markets. Consider China and the recent recalls of pet food , toys, and the scandal over 53,000 children falling ill from poisoned milk.
The root of the problem is that corporations exist solely to make money and are sometimes run by unscrupulous or unwise people doing whatever they can to make that money. Corporations do not exist to make reliable products, they do not exist to donate to community projects, they do not create social justice, or to improve your quality of life - though those things may happen if it improves the bottom line. Some CEOs use their wealth and influence to attempt to improve the world around them, but that speaks to the nature of the people, not corporations. Corporations in and of themselves tend to focus on their agenda at the expense of all other things, much as a sociopathic person does. Again, this is not new. We've all heard of the age of the robber barons.
There are those that believe that the free market will take care of all of this. Companies that produce inferior products will get weeded out of the market. Banks that make bad investments will fail. This is a plausible argument, but goes against history and practicality. History is telling us that when corporations are not regulated, we suffer through shoddy products and practices. The current banking crisis tells us that the principle can apply to entire industries, not just individual players. Allowing the giants to fail will create shockwaves in the economy that in the end punish you and I severely. Knowing that the giants have failed and new giants will arise someday to replace them is small consolation on a personal scale and economic suicide on a national scale. There is little choice but to help them out. In the end, their risk is our risk. And, if we accept that, then We The People should demand that our risk be minimized through regulation.
So, at first glance it appears that the DoD is their own worst enemy, insisting on excessive requirements and requesting small numbers of product. Many advocate for the DoD to relax their requirements, to effectively deregulate their suppliers. This has been tried in the past and has always resulted in disaster. Here's an example I remember quite well from the mid-1980s. The DoD buys millions and millions of bolts and they had a requirement in place where every time bolts were procured, a few were set aside and tested to ensure that they were as strong as advertised. These tests cost money and the bolts always passed the testing. So, as a cost savings measure, the rules were changed to allow the bolt maufacturers to simply provide paperwork showing that the bolts were tested at the time of manufacture. The bolt companies were now deregulated. By the mid-1980s the market was flooded with millions of counterfeit and substandard bolts that were not nearly as strong as the suppliers claimed on paper. This was a true scandal and affected the entire DoD (tanks were literally shaking apart), the space program, and even the consumer market. I was working on a satellite project at the time and we had to replace every bolt we still had access to with tested replacements and provide justification for bolts not replaced. The end result was stricter regulation in the form of the Fastener Quality Act of 1990. (More information on the Fastener Quality Act).
This is nothing new. The problem was so bad during the Civil War that the term for it entered our language. Shoddy originally meant an inferior type of cloth. So much of what the government purchased for the war was so bad, the time became known as "The Age of Shoddy," and we still use the word to mean any inferior product. Every time the government spends a lot of money, the contractors try to take advantage of it. The problem is universal, applying to the commercial world and even traditionally non-capitalist markets. Consider China and the recent recalls of pet food , toys, and the scandal over 53,000 children falling ill from poisoned milk.
The root of the problem is that corporations exist solely to make money and are sometimes run by unscrupulous or unwise people doing whatever they can to make that money. Corporations do not exist to make reliable products, they do not exist to donate to community projects, they do not create social justice, or to improve your quality of life - though those things may happen if it improves the bottom line. Some CEOs use their wealth and influence to attempt to improve the world around them, but that speaks to the nature of the people, not corporations. Corporations in and of themselves tend to focus on their agenda at the expense of all other things, much as a sociopathic person does. Again, this is not new. We've all heard of the age of the robber barons.
There are those that believe that the free market will take care of all of this. Companies that produce inferior products will get weeded out of the market. Banks that make bad investments will fail. This is a plausible argument, but goes against history and practicality. History is telling us that when corporations are not regulated, we suffer through shoddy products and practices. The current banking crisis tells us that the principle can apply to entire industries, not just individual players. Allowing the giants to fail will create shockwaves in the economy that in the end punish you and I severely. Knowing that the giants have failed and new giants will arise someday to replace them is small consolation on a personal scale and economic suicide on a national scale. There is little choice but to help them out. In the end, their risk is our risk. And, if we accept that, then We The People should demand that our risk be minimized through regulation.
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